US Stock Market...in or out!

Only God, well maybe Lazuras too, have the infinite wisdom to address these issues. Oh, I forgot, go to the Roman Catholic Church for confession, and maybe the Pope can bail you out, or point you in the right direction.

Semperfiguy wrote:All of my holdings are in the most aggressive funds available so that I can recover my losses in the short term while I am still alive to enjoy the gains.

I certainly wouldn't be in the most aggressive funds, - they are the most volatile - quick to go up, and quick to fall in the event of any bad news or market falls. I wouldn't be in just one geographical sector of the market - e.g. the USA, either.

I personally have very little exposure to the USA and don't follow things there so much. I would suggest Googling and finding a few relevant sites, that have write-ups and comment on the US markets. I don't know if you have "Motley Fool" over there? The odd snippets I have read tend to suggest that the market in the US has made the most of QE 1 and 2 and should be running out of steam soon, i.e. it can't have much further to go without some corrections..

I prefer to be diversified amongst stock/funds which include the UK, International, Asia Pacific/Far East, Europe, some Commodities (they've had a good run, maybe a bit more to go). I would avoid Japan and Middle East currently. Larger blue chip companies tend to be more stable in falling markets.

You could, if you have stock which is in profit, take some profits by either selling half or all of that stock. Also do some switching to less risky funds - diversify to a wider number of sectors and asset classes. Switch some to other asset classes and cash.

Does the US property market have further downside, if so I believe that would weaken things. The US has certainly got some very big debt that it isn't doing anything about reducing yet. At some point it will become time to pay the piper, like parts of Europe are having to do currently.

Personally I feel that after this and perhaps next week's rallies, things will go off the boil and move sideways for some time to come, if not fall back. There are a number of uncertainties in play currently, - Japan, Middle East, Gaddafi etc. There is an old adage "sell in May and go away", [or perhaps even in April] - which could fit the bill.

Or, ..
What's Warren Buffet up to? Markets could move on up for most of this year and then peter out. How's that for sitting on the fence.

I've taken some profits recently, reduced riskier holdings, switched to some safer and bigger blue chip companies/funds and focused more on good dividend paying stock and funds.

Just some thoughts, which I am not responsible for.

Well, I'm British, so anything i say may not apply,as i am invested in UK. But first, although not sure on US market, only getting 78% back so far doesn't look very good compared to UK; is this typical for US market sector or not? In the UK, most stocks have now achieved their 2007-2008 highs again, so all losses now restored (For me, the stocks i had kept lost about 35%, which was recovered by late last year). The general feeling in UK is i think that the market isn't going to rise much now for some time, although it rollercoasters over a 5-7% range. I am thinking of getting out while i am ahead.

Fortunately, seeing the USA problems in 2007 i swapped most of my investments to fixed interes tcash bonds, a good move as i locked in high interest rates for a few years, BUT i did not count on the fall in Pound sterling against other currencies; still about 20% down, so i lost there, but better than staying in stocks which were in sterling as well. I am generally staying on the bonds even though returns are now lower. Stocks would have been a good move in late 2008, but i had played safe so nothing left to invest. i guess your bond rates are even worse than ours? I can get 4.3% with little or no risk, but higher rates are only available for big sums and with risk factors to the capital.

IF you think there is going to be a big meltdown, you can either try asian stocks (but thats risky) or get something commodity related - particularly something for which demand will not fall - like food - maybe oil - it may be high now but i think it will never be under $100 again, and many oil fields are declining; unless a miracle occurs (massive new oilfields or a new cheap energy source) oil will be rationed by price within 10 years. Land is a good bet - not made any more and more people all the time means more demand. Certainly works that way round Udon, price only goes one way.

So i am bearish on the stock market for next 3 years, into bonds, and if i had any cash spare would buy land.

Check out AAPL.

It has a truly unbelievable track record, and strong prospects... Graph AAPL's 3, 5 or 10 year performance against the DOW, SnP or, say Berkshire-Hathaway... Unbelievable! (Yahoo Finance will do this for you...)

It's the largest e-retailer in the world and has large cash reserves.

In Aug 07 I reduced my equities exposure to less than 25% of my portfolio, largely maintaining Asian equities. Luckily, I guessed right and didn't take a big wash like many. I lost some, but it wasn't drastic.

I reentered in Sep 09, again putting about 75% in equities. Those 2 years of low earnings were disappointing, but better than the potential losses I would have otherwise sustained.

Remember, losses are only potential until you sell. I think there are 2 good reasons to sell at a loss: To stop more losses and to make the best of a bad situation by reducing taxable income.

At present, I'm not particularly worried about the equity markets. The wealthy have pretty good control of them and are continuing to increase their wealth. Little guys like me just try to ride on their coattails. I'll become more concerned when inflation starts to hit the US and EU more strongly.

I no longer purchase equities directly, only through mutual funds, and I put less than 15% in high gain, high risk funds. Investing shouldn't be thought of as gambling where you try to make up for losses. Rather is should be thought of as preservation of capital with a risk level that lets you sleep well at night. High gain, high risk investments are for younger people who can recoup any losses if they have the fortitude to hang tough during the lows, because over time they will still profit.

Older guys like us should be looking for modest gains and concentrate more on managing expenses; both investment expenses and living expenses.

I'm 65 and prefer index funds. I have investments in a US bond index fund, an S&P 500 index fund, a US small cap index fund, a SET 50 index fund, and a US based international index fund. I also have invested in other SET funds and US based Asian Pacific Rim funds.

The Thai funds are the most expensive in terms of fees and expenses, so I don't give them a lot. Basically using them as a place to keep living money rather than Thai banks here that pay very little. If I sell some of them the money shows up in my bank in 4-5 days, and I can purchase them electronically online and the money is deducted from my Thai bank.

I've also put some money in Thai land, but that's in the risky category because it's not liquid and may be hard to sell. A couple of rai of land won't pay an emergency hospital bill or some other unexpected large expense. But it's a possible good buy if you know someone who needs to sell because they need cash quickly.

So, Marine, accept your losses, reduce your risk, stand at ease, and sleep well. Good luck.

Semperfiguy, here are a few sources of relevant information, comment and opinions:

http://www.fool.co.uk/latest-stories/

http://www.fool.co.uk/news/investing/20 ... ycles.aspx

http://www.bloomberg.com/

http://www.bbc.co.uk/news/business-12863703

Let me preface this by saying I am an X-Squid (US Navy for the non vets) and a Wharton Alumni from University of Pennsylvania Magna Cum Laude. GET OUT OF THE US MARKET AND ALL US CURRENCY. Physical holdings of gold, silver, et cetera and prepare to lock and load and unfortunately, I am serious. I am looking at immigrating to Thailand now, but I am 42 and can't get the retirement visa. I am currently engaged to a girl from Udon Thani and just left a few weeks ago and go back and forth, but I have zero desire to be in the USA anymore and have enough to retire stashed. Anyhow, my two cents and Semper Squid. Gary

Not a problem at all to articulate a response, at least a Cliff Notes version. First US Department of Labor and Statistics utilizes U3 unemployment for data to show our “US Unemployment Rate” and in reality, the rate is MUCH higher (U6 is real unemployment). With negative behavior being rewarded and positive behavior getting punished, the exponential nature of the evaporation of wealth is at hand when looked at in a comprehensive manner. To be specific, if you pay your home and live responsibly, you get higher property taxes while your house depreciates near monthly. If on the other hand you do not pay for your home, you live in it for years, this after over extending yourself to purchase the house (AKA McMansion) and even get the utilities wiped out courtesy of the taxpayer’s dollars. Then, they do a principle reduction at a very low or no interest mortgage even wiping away utility bills (my x-GF is a realtor) and then they default AGAIN! You can then get section 8 housing, food stamps, and do not even believe the 99 week unemployment benefits, you can get it for 3 YEARS and even get free schooling from the taxpayers’ money while you do not even look for work. The entitlement mentality is growing like I never saw in my life and when people learned recently that they can vote themselves benefits without any perceived cost in a democracy-democracy WILL end. We have social security being exploited now, even the Muslim kids, the black American Muslims getting $600 per child for ADHD BS claims for the entire family and this is spreading not only in that respect, but all over everyone claiming this and that. If you work, GOD bless you as you will be hammered. I own a small technology company and now even I have to accommodate every nonsense request for disability (from alcoholism to depression) or fear lawsuits which pile up. Hell, they are suing McDonalds for having prizes in happy Meals because it makes kids want to go there and then they get fat. The issue is the monetization of debt for America, with China and Japan being our debt holders and Japan in no condition to support our currency, we are in deep do-do. Thanks to Ben Bernake, Japan already printed more Yen to “support the economy” and keep things going-GOD I love my precious metal investments…. I not only think a precipitous fall of the Dollar is possible, I think it is probable that it will happen this year. I see a change in attitude in this country like I never. I am 42 years old, a diehard entrepreneur and by any measure successful as a businessman and as a person and I see the US as a freight train where the conductor is high on Meth and just grabbed a cold beer and is snoozing as he lays down on the throttle. It is 10 PM here and I was at the gym and also ran today, so a bit tired so if this seems like a proliferation of hooked on phonics, forgive me and report me to Mensa immediately

As discussed/suggested above, I have taken the view to diversify as much as possible (different asset classes, as well as different geographical regions and different sectors), and to increase my weighting towards defensive stocks and those paying good dividends. That's partly why I tend to use Investment Trusts (similar to mutual funds), with less holdings directly in company shares.

E.g. I don't hold all my stock in the UK or all in oil companies, mining stocks, or even all in Equities. Diversification, must be the key word.

Keep an eye on this: http://www.fxstreet.com/rates-charts/usdollar-index/ If you "gain" money, it is all relative to the exchange, so a $6K gain could be a loss if the currency devalues. The support for US currency is FED buying bonds and it will stop at some point or there will be no buyers at the Treasury auctions and that will cause the Dollar to flail around like a harpooned whale, but as that is delayed the velocity of money needs to be watched, i.e. inflation and it is already coming to the US and will accelerate IMHO. I am near 100% silver and gold and I believe diversification is a hedge against stupidity for me. Take a look at this, this is NOT out of line: http://www.youtube.com/watch?v=2N8gJSMoOJc Like the flash trading that was blamed on everything, but I am a registered day trader and was on that day and I can see the FED’s hand moving in the market. After hours trading volume is crazy…. The best is banks holding onto commercial real estate as well as some residential real estate so as to not reconcile their books to show the real balance sheet…. The sheer number of US bank failures even now is indicative of a widespread systematic failure.

semperfi, if you're convinced that the market is headed toward a huge downturn, one'd have to question what you're doing in the market. No one is going to come knocking on your door to give you advance warning that the market will go up or down.....despite all the fortunetellers out there.....if you're losing sleep or can't afford to lose what you have in the market, you don't belong in the market.
No doubt there were fortunetellers who 'predicted' the crash of 2008........but I don't recall many fortunetellers who predicted the 60+% gain that the market would take after that crash.
The extra padding in your mattress will give you a better night's sleep than worrying about the next crash.